We’ve all heard, ad nauseum, the analysis of how terrible crime is, and how it’s wrecking South Africa, chasing away tourists and creating a general lawlessness in our society. But what benefit does crime bring to the South African economy?
For a few years now, I’ve been tossing out this question as soon as I get dragged into the usual crime discussion that we are all familiar with. From my grandmother’s weekly update of who got shot, to the mind-numbing blur of 702 callers sprouting clichés like “prisoners in our own home” and “if we had the death penalty, crime would stop”. Those are the costs of crime, and those are not only obvious, they’re indisputable.
However, there is no cost without some kind of gain for someone. And my argument is that the gain is far broader than most South Africans are willing to admit.
Beneficiary number one is, of course, the criminal. Leaving aside the Freakonomics-type analysis of how little money the average drug peddler makes, the simple fact is that the guy stealing your car has more money than he had before he stole your car.
Now, we (the law abiding citizens) don’t want him to get his income this way. We want him to go out and work, exchange his time for cash, and leave us with the possessions we got for our cash-exchanged-time. OK, but he still has the money now. And guess what that means? He has become a more economically viable individual. He can support himself and his family. In every other way, apart from how he got his money, he is better off.
And he is better off from society’s point of view as well. He is less of a burden on our other resources. He is, in a crude sense, the ultimate entrepreneur.
OK, so let’s follow our thieving swine off on his daily shopping rounds. With cash in his pocket -– the cash from selling your car or your DVD player to some other evil bastard -– where do you think he heads off to?
The stereotype would argue that he goes down to the nearest crack den, smokes up a storm and then lies in a puddle of his own excrement for the next few hours, before going off to burgle some more Parkhurst homes.
I challenge that.
I bet, at least some but probably most criminals also go off to Checkers and buy some food. And to Pep or Jet or, heaven forbid, Woolies and buy some clothes. They buy their pay-as-you-go card. Hell, maybe they even go to a movie. Even thieves have to know whether The Order of the Phoenix is triumphant or not.
This means that money is circulating into the economy. When Pick ‘n Pay announce their annual results, just how much of their income is directly or indirectly from money generated from crime? And I’m not even talking nice white collar crime, but you can throw that into the mix as well if you like. I’m talking about the guy that steals the Beamer that gives his wife some money to buy food for the kids.
I’m asking the question. No-one actually knows the real answer, which is how come retailers never have to account for this income any differently than the results of good old-fashioned proletarian wages. But you gotta give me this: it’s in there.
Does anyone believe that high insurance premiums don’t mean big profits for the insurers? Sure, they pay lots of claims, but I don’t see Donny Gordon standing on the street corner with a cardboard sign. The million-buck-a-year actuaries make quite sure that they’re always the winner, no matter how many new cars and hi-fi’s they buy.
Maybe it’s a zero sum game: if the premiums and payouts were lower, same profits, less effort. But I doubt it. I’ve never heard of a successful business where bigger revenues don’t equal bigger profits. And insurance companies? Pull the other one.
The Retailer again
So back at the store, guess who enjoys the benefits of all the replacement microwave ovens and flatscreen TV’s? As the insurers pay out claims, so the money goes right back into the economy. The number of appliances and other bright shiny things that are sold goes up. Companies grow. Profits soar.
Let’s not forget that the crime has created a massive, burgeoning, growing industry of security devices, experts, guards, guns, mace sprays and what-have-you. We may not want these private armies crawling around our suburbs, or maniacs in 4×4’s with handguns under their dashboards. But these are retail products, that cost money, and that are making the business owners rich, and providing jobs for countless staff. All to provide protection against crime.
And add to this the premium that townhouse and walled suburb developers can charge for added security. This has helped fuel the property boom, and there is someone called Golding or Seeff out there who’s pretty cheerful people are willing to pay big bucks to feel (nay, even, to be) safer.
And let’s not forget the irritating presence of the yellow plastic-shirted car guards who now seem as omnipresent as the fear of crime is. Yes, some of them are probably criminals themselves. And yes, they provide absolutely no real protection and are glorified beggars. But, at least some of the time, we pay them because they provide a sense of security. Maybe for them crime is just a marketing schpeel, but it does work. And it creates an income stream for the absolute lowest strata in society.
The local economy more generally
One of the other things I think about a lot is cash in circulation. Because of the insane cost of houses, buzzing equity markets and paranoia about JZ and the future, a lot of money has been pulled out of the economy and is sitting in one or other bank account. It’s locked up for a good long time, or it’s merrily contributing to the economies of the United Kingdom and Europe.
Nasty as the method is, crime pulls money back into circulation. Something gets stolen, funds have to be found to replace it. That money which otherwise was sitting locked away in some investment is back pockets again, growing businesses, trickling on down.
And that’s to say nothing of the direct redistribution of wealth that results from this whole system. Crime is not committed for fun. Ultimately, it’s a career choice, perhaps the most desperate one, that is available to someone who either has no others, or who doesn’t want to sell you a newspaper or fill up your car with petrol for R6 an hour.
Obviously people are going to jump up and down and argue that there’s still a net loss. Tourism, immigration, negative foreign investor sentiment, all outweigh these benefits outlined here. I’m not an economist. What I can say for sure, though, is that no-one has done the maths. They assume this is true, and they proceed onwards with the knee-jerk views that are offered at any family lunch or social do on any given day of any given week.
Crime is horrible. People die. It’s ugly. We’re paying a price for the economic benefits that we have not found a better way to offer to the disadvantaged, damaged, desperate and -– yes -– bad people in our society.